Art. 102 TFEU - specific abusive conducts - refusal to deal/supply

One of the most controversial issues that have arisen from the application of Article 102 of the TFEU is whether one undertaking’s refusal to deal with or to supply another undertaking can be considered an abuse as falling into the scope of this Article. This question is a matter of much analysis by scholars, and the analyzing the established case law by the ECJ shows that this concept is still subject to evolution.Firstly, there is a general consensus that undertakings are in principle free to deal with economic actors of their own choosing.This notion was reiterated by the European Commission in its Guidance paper on Article 102 enforcement priorities in which it states that:

"…generally speaking, any undertaking, whether dominant or not, should have the right to choose its trading partners and to dispose freely of its property." 

However, throughout the years the practice of the ECJ has established that dominant undertakings that refuse to supply in certain situation may constitute an abuse under Article 102.This idea, that a dominant undertaking as a duty to supply is contrary to the deep-seated notions of freedom of contract and basic property rights, as well as intellectual property rights.This is why, this forcing of an undertaking to enter into business with another undertaking has to be done only in very specific circumstances. Even the European commission states that "it requires careful consideration" when imposing this obligation on undertakings.The rationale why the freedom of choice with which an undertaking conducts business with should not be impacted is that it may primarily impact the incentive for such undertaking to develop new products or services.Also, allowing undertakings to have access to assets developed by other undertakings may lead to a „free rider“ problem, and thus reduce economic welfare.However, the ECJ has found certain situations in which the refusal to deal would produce such negative effects and reduce consumer welfare which may overcome the positive effects of allowing an undertaking to exert its dominance over others.

The first case in which this conduct was found to be an abuse was the Commercial Solventscase. In this case, the ECJ clearly stated that

"an undertaking which has a dominant position in the market in raw materials and which, with the object of reserving such raw material for manufacturing its own derivatives, refuses to supply a customer, which is itself a manufacturer of these derivatives, and therefore risks eliminating all competition on the part of this customer, is abusing its dominant position within the meaning of Article 86." 

It can be seen from this case that the ECJ used a teleological approach in defining whether there was an abuse of article 102 (article 86 in the time when the case was deliberated). Later on, in order to rain in the broad application of this principle, the ECJ throughout its case law established the standards which must be applied in order for this type of conduct to be considered as an abuse. The landmark cases which provide these standards are Magill,Oscar Bronner,and IMS, however this list is in no way exhaustive.

In Oscar Bronner, the ECJ provides the first comprehensive test to ascertain which behavior may constitute an abuse and in which circumstances. Namely, in order for an abuse to be present, the following factors must be present:

1. The refusal would likely eliminate all competition in the downstream market from the person requesting access;
2. There cannot be objective justification for the refusal;
3. The access must be indispensable to carrying on the other persons’s business, and
4. There must be no actual or potential substitute for it.

With the further development of the ECJ case law, other criteria have also been developed which are used to ascertain abuse by refusal to supply. One test which may be used is answering the following questions: (a) is there a refusal to supply?; (b) does the undertaking have a dominant position in an upstream market?; (c) is the product indispensable?; (d) will the refusal lead to elimination of competition?; (e) is there objective justification? 

From all of the analyzed cases an theory on this topic, the conclusion is the following: refusal to deal can be considered as an abuse in very specific situations. The most important factor is whether the dominant undertaking has the possibility to deny access to another undertaking to an asset which is indispensable. If this is the case, than denying such access will be considered as an abuse under article 102.